Customer Centricity in 5 Steps

How you can implement a customer focus practice in five steps ...

and develop products and services that really hit the right notes with your customers.

The key to actual customer focus lies in customer behavior. For too long, companies have insisted that they only need to ask or listen better to understand what their customers really want. After all, the customer is the only expert in actually knowing what they don't have for complete happiness.

The sad truth is though that customers often don't know that themselves. After all, it's difficult to express what's causing this feeling of latent dissatisfaction. It's even more difficult to imagine what the actual solution for this should look like, and what they would do if it actually existed (buy or not buy?). Asking then about the customers' opinions and attitudes to the topic don't really get you anywhere.

Relying solely on information about attitudes and opinions carries great risks regarding the accuracy of forecasts for new products or services.

It's much more predictable and accurate to focus on the customers' behavior and to draw the right conclusions. By asking, for example, how certain actions and decisions have come about, you can see how the assessment (decision) for a product or service pans out. But also which motives and behavioral patterns at which point led to this actual behavior. With this, we can determine what the success-relevant characteristics are that the product or service needs to fulfil for it to be bought. And how does the product in question compares. Where do things go wrong or where is the product being misperceived? What exactly needs to be changed and how does it need to be changed to achieve the target behavior (i.e. being bought)? But also which product characteristics or features are being neglected because they are not appreciated enough by the customer.

Exciting - but is there a systematic way or a tangible method to achieve this?

Yes, the following five steps outline the way:

Step 1: Key Behavior = typical target group actions

Get as exact a picture as possible of what's happening at the "moment of truth" with your customer.

For example: Imagine that a customer is standing in front of the shelf in a DIY store and wants to buy a cordless screwdriver: How does he proceed in finding the right one out of the 30 screwdrivers there? What criteria does he apply and in what order? Does he first look at the price, then at the performance and then at the brand - or is it the other way round? Why did he choose these criteria and in this order?

Step 2: Occurring Behavioral Economic Effects (BE Effects)

Every behavior has a cause.

There are always patterns of behavior (BE effects) that underlie the way we decide. Identifying these helps for a better and, above all, comprehensible understanding of the customer. These effects allow weak points to be changed with the appropriate success strategies (nudges).

Which behavioral effects can you identify around behavior? How strong are these effects? Are there behavioral patterns that are more important than others? Or are there behavioral patterns that support or cancel each other out?

Let's take the example with the cordless screwdrivers again: The customer may be overwhelmed by the choice of different products, and tries to get an overview, as quickly as possible. Often customers then fall back on the status quo bias and look for brands or products that they already know, and decide then only within this environment. A less known brand with a clearly better price-performance ratio has a harder time being taken into account when a decision is being made.

Step 3: Barriers

Barriers almost always stand in the way of the desired behavior.

For example, you find out that there are false assumptions about what really happens with the customer. Or the presented product is missing important components to be perceived as a solution (i.e. it's not a solution fit or it's a bad solution fit). It's crucial to uncover these barriers and describe them as precisely as possible.

A typical example of this are products that live by the motto "a lot helps a lot", i.e. products that are plastered with lots of information and product features with the aim of being recognized by the customer as the "best" product. Often the opposite is the case: the flood of information leads to the product being dropped, either because the customer is so confused that they postpone their purchase decision (drop the bucket effect), or they just decide to buy another product which seems less complex.

Step 4: Target Behavior

To hit the target, you have to know where you're going. What's the "ideal" customer behavior? Describe it as precisely as possible: how would you like the customer to behave? Where are there decisive deviations from the observed key behavior of your customers? Where do these deviations come from? Which BE effects lie behind the target behavior?

Using the example of the cordless screwdrivers again: it could be that you're the market leader in this field anyway, and, of course, you'd like customers to orientate themselves first with the most familiar brand (using the status quo bias to your advantage), and that as few competitors as possible are even considered. So, I have to make sure that my brand is (and remains) the status quo for my target group.

Step 5: Behavior Economics Success Strategies / Nudges

Now that we know which behavioral effects lie behind the customer behavior demonstrated, we can approach them with the most appropriate nudges.

Behind every effect there's also a success strategy about how to move it positively. For example, we know that customers tend not to buy (i.e. drop the bucket effect) when they feel they have to make too many decisions. A simple way to invalidate this effect is to remove the complexity and radically minimize the number of decisions.

Going back to our screwdriver example: if we notice the customer has difficulties with the performance figures on cordless screwdrivers, it'll help if they're explained as simply as possible, ideally with pictograms. An idea could be indicating a reference, e.g. the number of screws or the number of square meters of wooden patio, making it much easier for a decision to be made than the wattage or battery life.

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